A new McKinsey study 'Solving the UK's productivity puzzle in the digital age' seeks to address the reasons why the United Kingdom experiences chronically low productivity and what can be done to use technology to improve its performance. In the report the authors argue that 'Britain stands out as one of the worst productivity performers among its peers'. They indicate that there are four reasons for the weakness since the economic crisis: 'boom and bust' in the financial sector, the strength of employment growth, weak investment and uneven 'digitisation'. The report claims that the UK is operating at only 17% of its digitisation potential, indicating the vast scope for improvement. The report describes how declining labour productivity growth characterised many advanced economies after a boom in the 1960s, and how since the mid-2000s that decline has accelerated. Against this backdrop, the United Kingdom stands out as one of the worst performers among its peers, with its level of productivity persistently ranked toward the bottom of other advanced economies. The authors argue that boosting productivity is important for all advanced economies as they navigate potential economic headwinds, such as an ageing population and an ongoing shift to low-productivity services, but particularly for the United Kingdom, with an uncertain outlook for trade and investment after Brexit.
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